Lew Prince: Buffett Rule still makes Main Street sense
As a music store owner, the Buffett I’m usually concerned with is Jimmy Buffett of Margaritaville. But a bunch of lobbying groups who claim to represent small business are making me mad. They’re trying to scare people into believing that job-creating small businesses like mine won’t hire people if the “Buffett Rule” or anything like it is enacted.
What hogwash. The Buffett Rule is named after billionaire investor, Warren Buffet, who says it’s not fair that he pays a lower tax rate than his secretary. It would address the problem by assuring that households making over $1 million annually don’t pay a smaller share of their income in taxes than middle-class families pay. That sounds like simple common sense to me. But a minority of senators has blocked it from moving forward.
Politicians and lobbyists dedicated to protecting and even increasing the tax advantages that allow financiers, hedge fund managers, commodity speculators and executives of big corporations to avoid paying their fair share of taxes can’t say that’s what they are doing. So they profess to stand for “small business” and “job creators.”
My accountant works for a firm that does the taxes for more than 400 small businesses. I asked him how many of their clients would be effected by the Buffett Rule. His answer: “Maybe as many as four.” In other words, 1 percent or less.
Here’s what nationwide data shows: according to the nonpartisan Tax Policy Center, just 1 percent of the 34 million households reporting any business income on their tax returns earn more than $1 million annually. And that includes Wall Street investment partners and others who use Main Street small businesses as poster children when they oppose higher taxes on the highest incomes.
It’s not surprising that the lobby groups working to kill the Buffett Rule or anything like it are the same ones who twisted the tax system out of whack in the first place. It’s not surprising – but it’s wrong.
As the CEO of a small company, my primary job is to predict the future and prepare for it. For my company that means providing my two dozen employees the tools, training and logistics for growth and prosperity.
For a country that means updating and maintaining large grids like power, broadband, transportation networks and access to education, so we don’t waste our precious human capital. These are long-term investments whose payback accrues to all of us and our children and their children. These are the kind of investments generations made before us. These are investments we make as a community, and it’s only right that those who have gained the most from that infrastructure pay their fair share in maintaining it.
The organizations trying to scare us into believing that hiring will go down if tax rates go up are wrong. It’s not how business works for me or for much wealthier business owners.
If demand for our products increases and we need more people, we hire more people. If I get an idea for a new product or service that I think will make money, Vintage Vinyl, like most small businesses, views the people that we’ll hire to institute the service or make and market the product as a part of the cost of doing business. These are tax-deductible expenses. My tax rate on the profits has no effect on the decision.
It’s painful for me to watch my customers, who worry about scraping up enough to pay for their next tank of gas or bag of groceries, pay higher tax rates than some oil and food executives. The Buffett Rule is one of the steps we need to bring more fairness to the tax system and support the public investments and job creation we need for a healthy economy.
Prince is managing partner of Vintage Vinyl, an independent music store in St. Louis. He is also a member of Business for Shared Prosperity, a national network of forward-thinking business owners and executives.